State of Kentucky Government Worker 401k Retirement Proposal May Be Vision For Other States

Kentucky Governor Matt Bevin is proposing a 401k retirement plan to move state workers off their broken pension system.The debate anymore isn’t about the future. The future is now here and government workers either change or face massive cuts down the road no matter what courts rule in their favor. Taxpayer money is not infinite.

State pension plans are in horrendous shape. The plans themselves had financially impossible promises and now budgets are getting eaten up by medicaid. Now the proposal by Governor Bevin maybe the next phase of state governments in dealing with the financial problem.

Kentucky lawmakers head back to work this week for the first legislative session of 2018 and there are some questions hanging over the upcoming session.

Kentucky’s retirement system is one of the worst-funded in the country. State workers are owed billions of dollars in benefits over the next three decades, but the government is at least $41 billion short.

Governor Matt Bevin proposed a plan in October to replace the current system with a 401K style plan, but state workers rejected that idea. Bevin and others scrapped it and promised a new plan this year.

Senate Majority Floor Leader Damon Thayer said he hopes the bill is revealed to the public before Christmas so it can be reviewed in advance of lawmakers’ return for the legislative session that begins on Jan. 2.

“It doesn’t go as far as I would like it to, but it has many of the changes that were suggested by the public sector,” Thayer said. “It still makes changes in current pensions that are outside the inviolable contract.”

Under the plan, most future and some current state workers would be moved onto 401(k)-type plans in which the state would match employees’ retirement contributions but wouldn’t make monthly payments after retirement.

Current employees would have their conventional pension benefits capped after 27 years of service and moved into 401(k)s going forward.